The government may extend excise duty concessions for carmakers beyond December 31 as the industry continues to struggle with sluggish demand due to high interest rates, a finance ministry source has said.

"Car sales are down. The government could extend tax relief to the auto sector beyond December 31," the source said on condition of anonymity.

The government had cut excise duty on cars, SUVs and two-wheelers as well as consumer durables - valid till June 30 - in the Interim Budget in February to help the industry tide over a demand slump. In June, it further extended the tax breaks by six months to December 31.Automobile sales in India fell for the second consecutive year in 2013-14 and were 4.65 per cent lower at 17,86,899 units. In 2012-13, car sales fell 6.69 per cent, the first drop in a decade.

According to industry body SIAM, India's car sales are set to fall below the earlier growth target for FY15.Sale of passenger vehicles, which includes cars and utility vehicles, fell 7.5 per cent in October to 221,151 units from a year ago, breaking a consecutive rise for five months.